Drafting International Contracts: An Analysis of Contract Clauses

Contents......Page 4
List of Abbreviations......Page 16
Introduction......Page 18
I. Introduction......Page 22
II. Letters of Intent: Study of Cases......Page 26
A. First Group: Definitive Contracts, With Particular Variations......Page 27
B. Second Group: Stages in the Negotiation......Page 34
C. Third Group: Letters Without Binding Effect and Clauses Excluding Liability......Page 41
D. Fourth Group: Firm Agreement About Certain Particular Aspects of the Negotiations......Page 45
III. Legal Considerations......Page 51
1. Offer and Acceptance......Page 52
3. Definitive Contracts......Page 53
4. Condition Precedent......Page 54
1. Legal Nature......Page 55
2. Contracts to Negotiate: Principal Legal Problems......Page 65
IV. Advice to Negotiators......Page 75
V. Conclusion......Page 77
I. Introduction......Page 80
A. Frequency of Occurrence......Page 81
B. Form......Page 83
1. Attributes of the Parties......Page 84
2. The Parties' Objectives in Entering Into the Contract......Page 86
3. The Spirit in Which the Parties Have Entered Into the Contract......Page 88
4. Circumstances Preceding and Surrounding the Contract......Page 90
5. Links With Other Contracts......Page 92
6. Stages of the Negotiations Up to the Contract......Page 94
7. Acknowledgements and Statements by the Parties......Page 95
8. Statement of Parties' Undertakings......Page 97
9. Definition of Terms......Page 99
III. Rationale for Recitals......Page 100
1. International Treaties......Page 101
2. European Union Acts......Page 102
3. Constitutions......Page 104
4. Statutes and Regulations......Page 105
5. Judgments and Awards......Page 106
B. Legal Effects of Recitals to Contracts......Page 108
1. Interpretation of the Contract......Page 109
2. Vices de Consentement, Misrepresentations......Page 112
3. Bases on Which the Contract Was Entered Into......Page 113
5. Effect on the Parties' Obligations and on the Extent of Their Liability for Breach......Page 114
6. Status of Pre-Contractual Documents......Page 115
7. Links With Other Contracts or With Third Parties......Page 116
8. Substantive Provisions......Page 117
9. Simulated Transactions-Obligations in Favor of Third Parties......Page 119
10. Contractual Provisions on the Effects of Recitals......Page 120
V. Advice to Negotiators......Page 121
I. Working Method......Page 124
II. Different Contract Interpretation Models......Page 126
A. Substantive Law......Page 127
B. Evidence......Page 135
III. Analysis of Interpretation Clauses in International Contracts......Page 140
A. Characterization Clauses......Page 142
B. The Process of Contract Determination......Page 146
2. Ranking Clauses......Page 147
C. Entire Agreement Clauses......Page 150
1. Exclusion of Simulation (Side-Letters or Contre Lettres)......Page 152
2. Exclusion of Previous Contracts......Page 153
3. Exclusion of Pre-Contractual Documents......Page 155
4. Exclusion of Written or Oral Representations......Page 166
5. Exclusion of General Conditions: Blocking Clauses......Page 169
6. Exclusion of Future Contracts and Documents......Page 170
D. Heading Clauses......Page 172
E. Definition Clauses......Page 174
F. Language Clauses......Page 177
G. NOM-Clauses (No Oral Modification Clauses)......Page 180
H. Non-Waiver Clauses......Page 184
I. Severability Clauses......Page 188
J. Gap Filling Clauses......Page 197
K. Custom, Usage and Course of Dealing......Page 199
L. Good Faith and Fair Dealing Clauses......Page 200
IV. Conclusions......Page 202
I. Introduction......Page 208
a. Distribution Agreements and Sales Promotion......Page 209
b. Construction Agreements......Page 211
d. Research Agreements......Page 214
e. Technical Assistance Agreements......Page 215
f. Trademark and Patent License Agreements......Page 217
g. Satellite Launch Agreements......Page 218
h. Letter of Comfort......Page 219
i. Documentary Credit......Page 220
j. Counter-Trade Agreements......Page 221
a. Duty of Confidentiality......Page 222
b. "Porte-Fort" and "Good Offices"......Page 223
c. Force Majeure and Hardship Clauses......Page 224
d. Obligation to Mitigate Losses......Page 225
B. Observations Concerning Practice......Page 226
1. "Best Endeavours" and "Best Efforts"-English and American Interpretations......Page 228
2. "Reasonable" in Common Law and Civil Law......Page 235
3. "Due Diligence," "All Diligence," Obligations to Appropriate Means......Page 239
4. References to Business Norms......Page 243
1. Basic Criteria......Page 246
2. Shades of Meaning......Page 247
IV. Advice to Negotiators......Page 250
I. Introduction......Page 252
1. Form of Confidentiality Undertakings......Page 254
2. Types of Contract......Page 255
3. Stages in the Life of the Contract......Page 258
4. Unilateral, Reciprocal or Parallel Obligations......Page 259
1. The Subject Matter of the Confidentiality......Page 260
2. Exceptions Made as to Types of Information......Page 268
3. Exceptions Made as to Persons (Sharing the Secret)......Page 276
4. The Intensity of the Obligation-Steps to Be Taken......Page 291
5. Duration......Page 299
6. Remedies......Page 303
7. Limitation to the Scope of the Confidentiality Undertaking......Page 306
A. Confidentiality Without Any Confidentiality Clallse......Page 307
B. Transfer to Third Parties: Legal Aspects......Page 308
C. Legality of Confidentiality Clauses......Page 312
D. Confidentiality Clauses and Disclosure Under Legal Procedure......Page 314
E. Effectiveness of Confidentiality Clauses......Page 316
IV. Advice to Negotiators......Page 318
I. Introduction......Page 320
A. Analysis......Page 322
1. Late Performance......Page 323
2. Breach of Performance or Warranty of Quality......Page 340
3. Failure to Supply......Page 344
4. Failure to Perform an Obligation to Purchase......Page 345
6. Failure to Comply With an Obligation to Refrain From Acting......Page 347
B. General Considerations Concerning Practice......Page 349
2. Types of Obligations......Page 350
3. Absence of Penalty Clause......Page 352
4. Drafting Technique......Page 353
III. Legal Analysis......Page 355
1. Penalty Clauses and Clauses "for Winding Up the Contract"......Page 356
2. Penalty Clauses and Withdrawal Payments ( Clauses de Dedit)......Page 357
3. Penalty Clauses and Price Adjustment Clauses......Page 358
5. Penalty Clauses and Clauses Limiting Liability......Page 359
6. Penalty Clauses and Penalties Not Consisting of an Obligation to Pay a Sum of Money......Page 361
B. Whether the Clause May Be Declared Null and Void or Revised......Page 363
C. Combination of Remedies......Page 367
IV. Conclusion......Page 370
I. Introduction......Page 372
1. Liability and Warranty......Page 373
2. Clauses Relating to Pre-Contractual Statements......Page 374
3. Exemption Clauses or Limitation Clauses......Page 375
2. Force Majeure Clauses......Page 376
3. Hold-Harmless Agreements......Page 377
II. Practice......Page 378
A. Exemption Clauses......Page 379
1. Limitation of the Conditions......Page 381
a. Limitation of the Scope of the Obligations......Page 382
b. Liability Limited to Cases of Fraud or Gross Negligence......Page 383
c. Extension of the Cases of Exemption......Page 385
d. Transfer of the Burden of Proof......Page 387
e. Limitations of Time Periods to Take Action......Page 388
f. Subjection of the Claim to Special Requirements......Page 389
a. Limitation of the Amount Payable......Page 390
b. Liability Deductible......Page 393
d. Exclusion of Consequential Damages......Page 394
e. Exclusion of Unforeseeable Damages......Page 398
f. Limitation of the Warranty to Refund, Replace or Repair the Object Concerned-Clause of "Exclusive Remedy"......Page 399
g. Limitation of the Warranty as to the Warranty Enjoyed by the Seller Transfer of Warranty......Page 401
III. Additional Remarks and Critical Observations......Page 402
1. Domestic Legal Systems-Impact of European Directives......Page 403
2. International Instruments......Page 409
3. Private International Law......Page 410
B. Consequential and/or Unforeseeable Damages......Page 412
a. The Obligee Is Insured......Page 415
b. The Obligor Is Insured......Page 417
c. The Exemption Clause Renders Insurance Unnecessary......Page 418
2. Insurance and the Validity of Exemption Clauses......Page 419
IV. Conclusions......Page 420
I. Introduction......Page 422
A. Hypothesis......Page 423
b. Attenuation of Criteria......Page 424
c. Reference to External Criteria......Page 427
a. Lists......Page 429
b. Combination With the Definition......Page 434
c. Exclusions......Page 437
a. Notification......Page 439
b. Evidence......Page 442
c. Remedies......Page 443
3. Suspension of Performance......Page 445
b. Suspension Without Extension......Page 446
d. Unilateral Clauses......Page 447
e. Costs Incurred by the Parties......Page 448
4. Efforts to Overcome the Obstacle of Force Majeure......Page 449
5. The End of the Force Majeure: Notice......Page 450
a. Possible Termination......Page 451
b. Re-Negotiation......Page 453
c. Re-Negotiation or Termination......Page 455
d. Winding Up......Page 456
7. Obligations to Pay a Sum of Money......Page 457
8. Insurance Covering Force Majeure Events......Page 458
9. Differentiated Regime for Each Party......Page 459
A. Force Majeure and the Applicable Law......Page 460
B. Force Majeure and Lex Mercatoria......Page 462
1. Notion......Page 463
a. Hardship......Page 464
b. Exemption of Liability......Page 466
1. Exemption and Suspension......Page 467
2. Termination, Re-Negotiation, Adaptation, Winding Up......Page 468
1. Arguments Against Drafting a Model Force Majeure Clause......Page 469
2. The Expression Force Majeure......Page 471
B. Solution in Comparative Law......Page 474
C. Hardship Clauses......Page 476
D. Hardship and Force Majeure......Page 477
F. Hardship Clauses, Index Clauses, Review Clauses, Exchange Clauses, Adaptation Clauses, Etc......Page 478
A. General Observations......Page 479
1. Preamble......Page 481
2. Hypothesis......Page 482
1. Prejudice......Page 491
2. Objective Criteria......Page 492
4. Specific Consequences......Page 493
D. Establishing the Existence of the Relevant Situation......Page 494
F Procedure......Page 496
2. Re-Adaptation of the Contract......Page 497
3. Objective, Subjective and Mixed Criteria......Page 498
a. Lack of Specific Provision......Page 501
b. Termination of the Contract......Page 502
c. Suspension of the Contract......Page 503
d. Intervention of Third Parties......Page 504
G. Unilateral Clauses......Page 507
III. Final Observations......Page 508
I. Introduction......Page 514
A. Definition, Economic Role......Page 515
B. Concept of a More Favorable Offer......Page 516
C. Proof of Competitive Terms and Conditions......Page 518
D. Repercussions on the Contract......Page 519
E. Procedural Matters......Page 521
F Constraints on the Application of the Clause......Page 522
G. Variants of the Clause......Page 523
A. Definition, Economic Role, Comparison With English Clauses......Page 524
B. Comparability of Terms and Conditions......Page 525
C. Proof That More Favorable Conditions Have Been Granted......Page 527
D. Repercussions on the Contract......Page 528
E. Procedural Matters......Page 529
F Constraints and Limits on the Application of the Clause......Page 530
G. Variants of the Clause......Page 531
A. Definition, Comparison With Other Clauses......Page 533
B. Economic Role......Page 535
C. Provision in First-Refusal Clauses, Comparability and Verification......Page 539
D. Procedure......Page 543
E. A Variation: The "Savoy Clause"......Page 544
A. Nature of the Role of the Independent Assessor......Page 545
B. Remedies for Infringement on the Clauses......Page 548
C. Validity of the Clauses With Regard to Price Determination......Page 551
D. Validity of the Clauses With Regard to Competition Law......Page 553
VI. Final Considerations......Page 556
I. Working Method......Page 558
II. Introduction and Definitions......Page 559
III. Scope of the Chapter......Page 560
A. General Observations......Page 562
C. Distinction Between Transfer of Contract and Assignment of Rights......Page 566
E. Relationship of the Assignment Clause to Related Mechanisms......Page 567
F. Unilateral and Bilateral Assignment Clauses......Page 568
G. Compulsory and Voluntary Assignment......Page 569
2. No-Assignment Clauses......Page 570
3. Restrictive Assignment Clauses......Page 571
c. Criteria for Refusing Consent......Page 572
f. Sanction Upon Non-Compliance......Page 574
a. The Mfiliate Exception......Page 575
b. Other Exceptions......Page 577
I. Partial Assignments......Page 579
1. Consequence Vis-a-Vis the Assignee......Page 580
2. Consequences Vis-a-Vis the Assignor......Page 581
K. Warranties of the Assignor Vis-a-Vis the Debtor/ Obligor and Indemnities......Page 583
V. Conclusions......Page 584
I. Work Method......Page 586
III. Scope of the Chapter......Page 588
A. General Observations......Page 590
B. Headings......Page 593
D. Relationship of Termination Clauses to Other Contracts......Page 594
F. Nullity and Voidability......Page 595
G. Condition Subsequent......Page 597
I. Performance......Page 598
J. Breach of Contract......Page 599
K. Passing of a Fixed Period......Page 602
L. Termination at Will......Page 603
M. Objective Termination Events......Page 604
N. Partial Termination......Page 608
O. Consequences of the Application of the Termination Clause......Page 609
V. Conclusions......Page 616
I. Introduction......Page 618
II. Post-Contractual Obligations: General Overview......Page 619
1. Fate of Remaining Stock......Page 620
2. Fate of a Data Bank......Page 621
4. Return of Advertising Materials......Page 622
5. Effects of Outstanding Orders......Page 623
7. Effects on Work in Progress......Page 624
B. Extension Into the Future......Page 625
1. Agreement Not to Compete......Page 626
2. Duties of Confidentiality......Page 627
3. Guarantee Obligations......Page 629
5. Fidelity, Exclusivity, First Refusal......Page 631
III. Post-Contractual Obligations: Common Problems......Page 632
A. Express Clauses and Implicit Obligations......Page 633
B. Specific Clauses, Enumeration or General Formula?......Page 635
C. Problems of Lawfulness......Page 636
E. Parallel Survival of the General Clauses of the Contract?......Page 637
F. Duration and Change in Circumstances......Page 639
IV. Conclusion......Page 641
Final Observations......Page 642
List of Members......Page 662
Reference to Original Publications......Page 666
Index......Page 668